Reconciling Profits and Ethics

By Dr Fanny Salignac University of Sydney, 2011

Guest contributor: Tracy Wilcox

In her timely and important thesis The Institutionalization of Fairtrade: Reconciling Profit-Seeking with Ethical-Seeking Behaviour, researcher Fanny Salignac draws on a comprehensive study of Fairtrade at the coalface to bring us a rich and vivid understanding of how Fairtrade is enacted in practice; from the perspective of key players in the ‘Western’ world (the North) and, perhaps more importantly, the ‘developing’ world (the South). This is a significant piece of work which has particular resonance for those of us interested in how positive social change might be enabled within existing consumer-based market structures.

Fairtrade can be defined in terms of a “trading partnership based on dialogue, transparency and respect” with the overall aim of “solving social justice issues through international trade” (p3). In her study Salignac paints a vivid picture of the expansion of the Fairtrade movement, and the associated tensions as it grows in size and scope.

We learn that ‘Fair trade’ has been around since the 1988 formation of Max Havelaar in Netherlands and the adoption four years later in the UK. Fairtrade is now a multimillion dollar industry; with 3,000 licensees in 10 consumer countries representing 1.2 million farmers/producers in 58 countries of the South. The ‘movement’ is in fact a complex arrangement of NGOs, Alternative Trade Organisations, for-profit and not-for-profit organisations.

As the movement matures and grows, Salignac poses some important and timely questions; namely,

does FT practice support its moral claim to ‘provide a way out of poverty through trade’ or is it merely a marketing phenomenon, another example of ‘greenwash’? and,

can the FT movement provide us with a template for reconciling the tensions between economy/market on one hand and society/community on the other?

Up until recently, research has tended to focus on the end point of the value-chain – on consumers, rather than retailers at one end or the producers at the other. Where there has been empirical work, it concentrates mainly on growers (usually coffee) in Latin America.

Salignac’s research addresses this gap in our understanding by looking across the value chain from retailers and certification organisations in the North to producers and cooperatives in the South.

By drawing on her field research in the UK, France, and Australia, along with India and Vietnam (a total of nineteen case studies), we hear the voices of those immersed in the day to day world of Fair Trade.

Salignac’s research uncovers some important theoretical and practical issues, and makes an important contribution to organisational sociology, in particular ‘institutional theory’. She is able to consider how market-based arrangements can potentially be used to counteract some of the effects of dominant neo-liberal economics model. As such it’s an example of what institutional theorists call institutional entrepreneurship.

Importantly for us here at CSI, we can also learn a great deal about what happens when ideals-based social visions are translated across the globe, and the degree to which collective meaning is shared amongst key participants. We see here that the original and global vision of Fairtrade has become fragmented and the founding communitarian ideals of trade justice and ethical consumption are not always present at the coalface. This is particularly the case with retailers and certifiers in the North.

Salignac found that in the UK the predominant vision is one of the mainstream ‘market’, while in France, Fairtrade is still considered somewhat militant.

Australia, she rather diplomatically observes, is still developing – though I would put it more bluntly and say that we are clearly laggers in the adoption of Fairtrade both in vision and in practice. The Indian and Vietnamese producers’ voices, on the other hand, were more in keeping with the reconciliation of economic and social value creation.

Finally, Salignac makes the important point that the Fairtrade movement’s ‘core global vision’ needs to be both solid – to prevent fragmentation into diverging visions – and flexible enough to allow for transformation at the local level. In the case studies featured here, this was unfortunately not the case. What we need are more robust processes of information dissemination and knowledge production across the value chain and between the North and South.

This study has pointed us in an important new direction which will, it is hoped, help this need be met.

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